Europe -  Bucharest, Romania

Bucharest, Romania’s capital and the seat of its government, is undoubtedly the country’s main communications and industrial centre, with many multinational companies now represented in the city. The area around Piata Victoriei is establishing itself as the city’s business district. Key sectors within the city are oil (represented by companies such as Shell, Agip and Texaco), cars (Renault and Nissan), IT (Microsoft and IBM) and banking and finance (Raiffeisen, Société Générale, ING Bank, Citibank, and others).

Romania is now among the fastest growing economies in the EU, driven by increased consumption through recent tax reliefs and VAT cuts. Wages are rising due to a shortage of qualified personnel. Successful businesses have helped to increase spending in Bucharest and drive the accommodation sector. While the corporate segment remains dominant, leisure tourism is rising, supported by Danube River cruises. Significant potential exists in the market, as occupancies are high (over 70%) and rates are still well below those of hotels in the neighbouring cities of Prague and Budapest, owing partly to the smaller luxury market in Bucharest. The future looks bright, but the country lacks professionals promoting the city and a modern MICE venue to attract large conferences. Underdeveloped infrastructure and the shortage of qualified hotel staff are likely to be some of the challenges for this market to overcome.

Both domestic and international arrivals to Bucharest were affected by the global economic downturn in 2009, and registered decreases. This had a major effect on the hotel industry, with a strong decrease in occupancy and average rate leading to a RevPAR decline of close to 30% in 2009; this negative trend continued and reached an all-time low close to €40 in 2013. Strong recovery started from 2014, with an average RevPAR growth of over 9% per annum from 2014-16. However, the strong growth momentum slowed down in 2017 with a RevPAR growth of just 4%, leaving RevPAR some 30% lower than at its peak in 2007.

In the past, high barriers to entry have prevented new hotels from being developed in Bucharest. However, the privatisation process in Romania has allowed the hotel industry to develop at an accelerated pace. Therefore, hotel supply in Bucharest has increased in the past few years and the room stock is expected to increase by a further 5% by 2020.

The hotel market in Bucharest has recorded a very low level of transactions since the economic crisis in 2008. In December 2017, the dual-branded Radisson Blu and Park Inn complex was acquired for €166 million (€218,000 per key), which was the largest ever transaction deal in terms of volume in Romania.

Change In Value For Market: (€Euro)

Legend
Significant Value Increase: Greater than +10%
Moderate Value Increase: Between +3% and +10%
Stable Values: Between -3% and +3%
Moderate Value Decline: Between -3% and -10%
Significant Value Decline: Less than -10%

Bucharest RevPAR Change (€Euro)

Bucharest RevPAR (€Euro)

For more information, please contact:

Sophie Perret, MRICS, MBA
sperret@hvs.com
  • +44 20 7878 7722 (w)
Simon Hulten
shulten@hvs.com
  • +44 020 7878-7775 (w)